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Conditional Cash Transfers, Public Provision of Private Goods, and Income Redistribution

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  • Firouz Gahvari
  • Enlinson Mattos

Abstract

This paper examines the role of cash transfers as a screening device when combined with in-kind transfers. It shows that linking in-kind to cash transfers makes first-best redistribution possible despite the government's inability to tell rich and poor individuals apart. Moreover, the maximal attainable welfare for the poor can be pushed beyond its first-best level by distorting downward the quality of the indivisible good the poor receive relative to the cash value of their net transfers. Using in-kind transfers alone, as in Besley and Coate (1991), leads to a third-best solution. (JEL D31, H23, H41)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.97.1.491
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File URL: http://www.aeaweb.org/aer/data/mar07/20050013_app.pdf
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 97 (2007)
Issue (Month): 1 (March)
Pages: 491-502

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Handle: RePEc:aea:aecrev:v:97:y:2007:i:1:p:491-502

Note: DOI: 10.1257/aer.97.1.491
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References

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  1. Nichols, Albert L & Zeckhauser, Richard J, 1982. "Targeting Transfers through Restrictions on Recipients," American Economic Review, American Economic Association, vol. 72(2), pages 372-77, May.
  2. François Bourguignon & Francisco H. G. Ferreira & Phillippe G. Leite, 2002. "Ex-ante Evaluation of Conditional Cash Transfer Programs: The Case of Bolsa Escola," William Davidson Institute Working Papers Series 516, William Davidson Institute at the University of Michigan.
  3. Gahvari, Firouz, 1995. "In-Kind versus Cash Transfers in the Presence of Distortionary Taxes," Economic Inquiry, Western Economic Association International, vol. 33(1), pages 45-53, January.
  4. Besley, Timothy & Coate, Stephen, 1991. "Public Provision of Private Goods and the Redistribution of Income," American Economic Review, American Economic Association, vol. 81(4), pages 979-84, September.
  5. Gahvari, Firouz, 1994. "In-kind transfers, cash grants and labor supply," Journal of Public Economics, Elsevier, vol. 55(3), pages 495-504, November.
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Citations

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Cited by:
  1. Elena Del Rey & Fernanda Estevan, 2011. "Conditional Cash Transfers and Education Quality in the Presence of Credit Constraints," Working Papers 1108E, University of Ottawa, Department of Economics.
  2. Hanming Fang & Peter Norman, 2008. "Toward an Efficiency Rationale for the Public Provision of Private Goods," 2008 Meeting Papers 1097, Society for Economic Dynamics.
  3. Enlinson Mattos & Vitor França, 2011. "Public employment and income redistribution: causal evidence for Brazilian municipalities," Public Choice, Springer, vol. 146(1), pages 43-73, January.
  4. Earl L. Grinols & Peri Silva, 2012. "Intervention Efficiency, Incentive Symmetry, and Information," Development Working Papers 334, Centro Studi Luca d\'Agliano, University of Milano, revised 16 Jul 2012.
  5. Enlinson Mattos, 2007. "Cash-Cum-In-Kind Transfers, Tax Rates And Labor Supply: Qualifying The Record," Anais do XXXV Encontro Nacional de Economia [Proceedings of the 35th Brazilian Economics Meeting] 020, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  6. Raschky, Paul A. & Schwindt, Manijeh, 2009. "On the channel and type of international disaster aid," Policy Research Working Paper Series 4953, The World Bank.
  7. Janet Currie & Firouz Gahvari, 2008. "Transfers in Cash and In-Kind: Theory Meets the Data," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 333-83, June.
  8. Armando Barrientos & Juan Miguel Villa, 2013. "Antipoverty transfers and labour force participation effects," Brooks World Poverty Institute Working Paper Series 18513, BWPI, The University of Manchester.
  9. Kazianga, Harounan & de Walque, Damien & Alderman, Harold, 2009. "Educational and health impacts of two school feeding schemes : evidence from a randomized trial in rural Burkina Faso," Policy Research Working Paper Series 4976, The World Bank.
  10. Paul A. Raschky & Manijeh Schwindt, . "Aid, Catastrophes and the Samaritan's Dilemma," Working Papers 2008-06, Faculty of Economics and Statistics, University of Innsbruck.

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